Southwest Airlines Reports Loss

[General Lee]

SWA has had accounting rules come along with every financial statement.

It is required by law.

Oh, you mean Sal the accountant doesn't just leave it blank except "we made $$$$$$$$$$"? I know that genius. I was talking about the special items, etc.....accounting "tools" I guess. Wow, you got me turbo nerd.


Bye Bye--General Lee

 

[momalley81]

Oh, you mean Sal the accountant doesn't just leave it blank except "we made $$$$$$$$$$"? I know that genius. I was talking about the special items, etc.....accounting "tools" I guess. Wow, you got me turbo nerd.


Bye Bye--General Lee

Again, SWA has used special items and charges in the past to their advantage. This is nothing new.

Almost 12,000 posts and you are calling me "Turbo Nerd"?

Ok, sure thing chief.

 

[vikesfanIV]

I listened to the Delta investor conference call yesterday and just listened to SWA's a few minutes ago. It was a much more productive 2 hours than reading posts on here from people who have no clue what they are talking about.

Richard Anderson & Gary Kelly both spent a good amount of time discussing fuel hedges and how each of their companies deals with the flucuations in fuel prices. Bottom line, ALL airlines will benefit from the falling oil prices. Most will be taking advantage of this steep decline to hedge into the future. I still believe this is one place SWA has a major advantage because we are the only airline with an "investement grade" credit rating that can actually hedge 5 years in advance. We have begun to hedge modestly for 2013 while at the same time trying to lighten some of our hedges in the near term to take advantage of the falling prices. Delta is doing much the same but it sounded like they prefer to only hedge 1 year in advance. They are also hedged higher than the current prices of oil so they will be seeing near term losses on those hedges, but this will be offset by larger gains (savings) on the unhedged portion of their fuel.

Here's a link to both conference calls.
http://www.southwest.com/?src=INVRINV3Q08000000081016

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=71481&eventID=1993781

 

[The Victors]

Remember that the "Jerry Springer" crowd will not be flying when air fare's cost more than Greyhound.

Oh..where to start. I wouldn't be to proud of the people you fly around in that 1950's polished turd of yours. I've been on your airline and they are the same or worse. Such a high class of people in Detoilet. It's amazing to me how people hope and pray for bad results from any other airline, except theirs. If you are a 9 captain, do you realize that you go to work for less money than a swa fo? Do you like making crap money because you're flying crap around. Maybe, just maybe, you might think about the fact that if swa continues to be successful, you will have some leverage in contract talks TO GET A BETTER CONTRACT THAN THOSE SWA GUYS!! It's not that difficult a concept.

 

[Bob_Sacamano]

It looks like we beat Wall Street expectations and earned 9 cents per share versus estimates of 7 cents per share...which has sent our stock up 6% today.

However, hopefully the paper loss due to the GAAP rules regarding the fuel hedges will frighten some of the folks down in Dallas into actually mandating cost-cutting measures instead of just plowing along as usual. I can't tell you how many times I've heard we do something "just because that's the way we've always done it". Hopefully this will be the kick in the pants we need.

Having said that, there's still no other airline I'd rather fly for.

 

[contrail67]

"Ding" you are now free to lose money like the rest of us.

Too funny.

 

[lowecur]

what was that you were saying.

"Although today's challenges are unprecedented, we are well-prepared and committed to achieving our long-term financial targets and preserving our financial strength. Our unrestricted cash and short-term investment balance was $2.2 billion as of yesterday, including $1.1 billion in fuel derivative collateral deposits. Although our liquidity is healthy, we have made the prudent decision in today's unstable financial markets to access $400 million in additional cash through our bank revolving credit facility leaving $200 million still available. We remain financially conservative and well-prepared with our strong balance sheet and modest debt levels."

I am by no means justifying our loss. Like GUP said if you give s%!t you have to be able to take it.

Gary's a smart guy, no doubt about it. What will be interesting is to see his reaction if oil blows through $60, then $50bbl. The volatility and speed that this can happen, and the probability of a traumatic reversal at some point 2 or 3 years down the line, will make for an interesting decision whether he will sell or hold contracts. Some of the recent contracts are underwater and they've addressed that through write off's, not sales. So, if the past is any indication to the future, he may just hold the contracts all the way down to a bottom.........He better hope the economy bounces back, cuz he'll be spinning too many plates if we stay in a protracted deep recession or depression. If he pulls this off without losing much skin, the man should be running the country.

imp: ​

 

[LearLove]

hey chef - we get it your a JB pilot. the blue text is gay. normal black like the rest of us children will be fine from now on.

 

[whymeworry?]

All I've got to say is: TOLD YOU, TOLD YOU, TOLD YOU.

SW wasn't able to make money in this environment without their hedges. Their own CEO has said this many times over the past year so this should come as no surprise to anyone but the most cultic SW employees.

 

[Bavarian Chef]

hey chef - we get it your a JB pilot. the blue text is gay. normal black like the rest of us children will be fine from now on.

Whatever you say. Getting right on that.

 

[momalley81]

All I've got to say is: TOLD YOU, TOLD YOU, TOLD YOU.

SW wasn't able to make money in this environment without their hedges. Their own CEO has said this many times over the past year so this should come as no surprise to anyone but the most cultic SW employees.

You didn't tell us anything.

SWA made an operating profit of $69 million.

Because the hedges are worth less now (about half)than they were about 3-4 months ago a charge was incurred.

This has nothing to do with SW not being able to make money in this environment without their hedges. How you came up with that is beyond me.

 

[firstthird]

it has been pointed out before but I'll try again.

There is a difference between "one time items" and "GAAP" accounting.

SWA posted a profit on non-GAAP revenue this quarter. no 'one time items' included in the profit (or the loss actually)

SWA posted a loss on GAAP accounting this quarter. They didn't post a loss on 'one-time items' like multi-billion dollar write downs in 'good will' or 'merger costs' or 'bankruptcy costs' or whatever else ends up in the 'one time item' catagory.

The difference is fine but important. the GAAP losses and gains are much more akin to the 'decrease in goodwill' than the other 'one-time' costs. i.e. not real. they are an accounting trick. we didn't really make 800 million in the second quarter, only 200 million (or whatever it was) and we didn't really lose 260 million but rather made 70 million.

now, 70 million ain't good. and personally, it might not be a bad thing to post a real, quarterly loss just to get that monkey off our back. I want our company managed for the long term, not for quarterly wall street numbers.

these are tough times and we're all feeling it. but the news stories that are trumpeting 'SWA first loss in 17 years' are not correct in any actual sense of profit or loss. congress really jacked with accounting rules due to dotcoms that were supposedly playing games with options and whatnot. (I think) and now it is confusing as hell for anyone but a professional accountant and I don't think they particualarly dig these rules either.

 

[Mea25000]

Just wait tell your 4th quarter numbers come in you wont need any gap help on those.

 

[Benjamin Dover]

People still need to travel around the world, and it takes too long on boats. The mega rich who used to fly on corporate jets will have to be reduced to first class travel on airliners. So will plenty of middle managers trying to rescue their businesses around the globe. So, there will be capacity cuts (we will cut more RJs), and you will have to cut 737s(?---you have no RJs--at least you aren't getting those 3 extra 737s this year).

And, LBB probably is awesome for you guys. The oil industry, which is huge out there in West Texas, is probably having trouble with this huge oil price fall, and profits aren't there like the used to be a few months ago. They are hating this economic downturn probably more than anyone else. At least they can hop one of your 737-300s and fly to LAS, to really gamble.


Bye Bye--General Lee

So General,

In the past when Delta has posted a quarterly loss due to write offs or "special charges", you were always quick to point out Delta's operating profit for the quarter. Wonder why you're silent on that issue this time??

 

[Falcon Jet 1]

Lowercur,
I remember an earnings conference about two years ago when oil fell to 50 a barrel, and all of the analysts(like you) were hounding on Gary about fuel costs and losing money on the hedges. His and Laura Wright's response was great, they laughed at them literally. I remember listening going these analysts dont know their ass from a hole in the ground, and thank the lord above these guys(SWA) know what in the hell they are doing. I didnt listen to todays yet, but I would bet it is reminiscient of a few years ago.

 

[contrail67]

Just wait tell your 4th quarter numbers come in you wont need any gap help on those.

But airlines are worried that they are merely trading one big problem for another, as global financial markets sag and indicators point to recession in the U.S.
"The main thing now is the recession and the impact on travel demand," said Southwest CEO Gary Kelly. "We haven't seen any impact yet. My biggest concern now is January."

 

[ultrarunner]

Remember that the "Jerry Springer" crowd will not be flying when air fare's cost more than Greyhound.

I dream of that day!!!

 

[General Lee]

You didn't tell us anything.

SWA made an operating profit of $69 million.

Because the hedges are worth less now (about half)than they were about 3-4 months ago a charge was incurred.

This has nothing to do with SW not being able to make money in this environment without their hedges. How you came up with that is beyond me.

Uh Huh. Yeah, riiiiiiight. The SWA guys have been dogging us for years, laughing at our "one time charges" and special accounting tools. Well, now they get to use them. I am sure they did get an "operating profit." I remember Delta doing that too after they also reported a technical loss.

Hey, how is starcheck doing? How many legs do you do a night in the Lear? Is that fun? Do you hit LBB?


Bye Bye--General Lee

 

[General Lee]

So General,

In the past when Delta has posted a quarterly loss due to write offs or "special charges", you were always quick to point out Delta's operating profit for the quarter. Wonder why you're silent on that issue this time??

Not correct. I also did point out that there seem to be a lot of "one time charges", especially during our BK when we were trying to get our wages negotiated. I thought we were the "king of the one time charges." And, I did point out that we did have operating profits some of the time. The difference is Southwest has NEVER done this before, which signals something. I guess times are TOUGH for everyone, even SWA now.


Bye Bye--General Lee

 

[Tanker Clown]

I guess people will stop giving me a hard time about SWA asking guys to take LOAs. If I were a SWA guy who is a reservist, I'd be looking into how many man days were out there at your unit.